A substantial majority of artists, authors and performers have difficulty in producing and/or distributing creative works which are economically beneficial to the artist without losing the rights (and therefore much of the royalties) of the creative works or sacrificing a significant portion of the sale price. Specifically, with regard to musical creations, the majority of musicians find it incredibly difficult, if not impossible, to record, market and distribute a song/album to their fans and make a profit, unless the artist has a recording contract with a record company, and the song/album is well received (well sold) by fans and/or the public. In fact, even if the artist has a recording contract, artists generally make little to no money from recording an album since artists are either required to pay for producing the album up front, or through sales of the album. If the latter, most times sales of the album do not cover those costs. Thus, artists generally don't make any money from making albums and often times are never able to recoup the costs of making the album.
For example, according to the publication, “This Business of Music” the artist royalty on a typical record album is as follows: new artists usually typically receive 7 to 12 percent of the suggested retail list price for domestic sales. In the case of a superstar, the royalty on domestic sales may start at 15 percent or more of the suggested retail price. Accordingly, here is a typical all-in royalty calculation on a $14.98 compact disc where the artist's base royalty is 12 percent:12 percent−3 percent (producer's royalty)=9 percent9 percent×0.75 (25 percent reduction for packaging)=6.75 percent6.75 percent×0.85 (15 percent for “free goods”)=5.74 percent5.74 percent×0.80 (20 percent reduction for CDs)=4.59 percent4.59 percent×0.65 (35 percent reduction for reserves)=2.98 percent2.98 percent of $14.98=$0.447.The profit per album for superstars is only modestly more, about $0.56. However, superstars generally sell enough albums to cover recording and distribution costs. However, the above royalty calculations do not take into account items charged against an artist's royalty account, such as video production costs or independent promotion costs.
Another problem with the current recording business model is copyright infringement from the trading of digital copies of artists' creations over the Internet (for example) using peer-to-peer file sharing networks. Currently, both artists and the recording industry are losing millions (or perhaps billions) of dollars in lost sales due to the piracy of copyrighted works.
Accordingly, there exists a need for a method and/or system which will allow artists, for example, to raise capital on their own and profit for producing a creative work, preferably prior to producing the work, and preferably without a recording contract with a recording company.
Another problem for up-and-coming artists is the lack of exposure to a broad audience. Without signing a contract with a record company, it has been virtually impossible for new artists to gain the exposure they need to sustain grow financially and creatively. Accordingly, there is a need for a broader more effective method for artists to develop a larger fan base without sacrificing the majority of their profits or their intellectual property.